European shares rose Monday as investors rushed to buy after recent volatility and selloffs, while Asian markets were mixed and U.S market was closed for a public holiday.

The market appears to be already pricing in a recessionary scenario and valuations are at extremely supportive levels for equities, said investment strategist Shanthi Nair at Lehman Brothers in a research note.

The pace of recent analyst revisions appears to indicate that we may be close to a bottom, Nair added.

The pan-European Dow Jones Stoxx 600 index gained 1.9 percent to 323.53, with U.K. banks bringing in large gains after the British government announced Sunday that it will nationalize Northern Rock temporarily until it can find a buyer. Shares of the troubled U.K. mortgage lender last traded at 90 pence.

U.K. banking stocks gained after weekend reports suggested some banks will reveal unexpected increases in dividends for the year 2007.

Lloyds TSB Group PLC gained 7.3 percent to end at 425.5 pence, Barclays PLC soared 7.6 percent to 460 pence and Standard Chartered PLC added 5.8 percent to close at 1620 pence.

Mining stocks rose as metals prices surged. BHP Billiton, which is bidding for Rio Tinto, advanced 4.3 percent, while Anglo American rose 2.8 percent.

The U.K.'s FTSE 100 Index climbed 2.8 percent to 5946.60, while France's CAC-40 Index gained 1.9 percent to 4861.80. Germany's DAX Index closed 2 percent higher at 6967.55.

U.S. shares closed off their worst levels Friday. U.S. markets were closed Monday for the Presidents Day holiday.

ASIAN MARKET ROUNDUP

Japanese stocks ended flat while Hong Kong shares dropped amid concerns of further monetary tightening in mainland China.

Tokyo's Nikkei index climbed 12.84 points to 13,635.40 while Hong Kong's blue-chip Hang Seng index dropped 1.6 per cent to 23,759.25 points. It had gained 6.8 per cent over the previous four sessions.

Analysts said traders were cautious due to continued concerns about the American economy. The Shanghai composite index edged 1.6 percent higher to 4,568.15.

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